Holding

The Supreme Court held that the direction to prosecute under Section 340 CrPC was not expedient given the Revenue’s silence for fifteen months, and that an order levying penal interest was a more appropriate remedy, thereby setting aside the High Court’s order.

Summary

Godrej & Boyce manufactured refrigerators packed in corrugated fibre containers (CFCs) and contested the inclusion of CFC value in excise valuation. The Revenue served demand notices including CFC value, leading Godrej to file writ petitions. Godrej attempted to support its case with fabricated dealer letters, which were later discovered. The Revenue sought criminal prosecution under Section 192 IPC for fabricating evidence, and the High Court Division Bench, invoking Section 340 CrPC, directed a complaint to be filed. The Supreme Court examined whether the direction to prosecute was expedient, noting the Revenue’s fifteen‑month silence and lack of an earlier request for prosecution. It held that the direction was not justified and that levying penal interest was a more appropriate remedy, setting aside the High Court order and substituting an order for penal interest.

Issues considered

The appropriateness of directing criminal prosecution under Section 340 CrPC after a long lapse and without a prior request by the Revenue.
Whether Section 192 IPC applies to the fabrication of letters intended to support a civil claim.
The concept of 'expediency' under Section 340 CrPC in ordering prosecution.
The jurisdiction of a High Court Division Bench to issue a direction for prosecution in such circumstances.
Whether an order levying penal interest is a suitable alternative to criminal prosecution.

Legislation cited

Central Excise and Salt Act, 1944s. 4
Code of Criminal Procedure, 1973s. 195, s. 340
Indian Penal Code, 1860s. 192, s. 193

Subjects

fabrication of evidenceSection 192 IPCSection 340 CrPCexpediencypenal interestcentral excise valuationcorrugated fibre containerscorporate fraudcriminal prosecution

Judgment

PHIROZE DINSHAW LAM ETC. A
v.
UNION OF INDIA AND OTHERS.

FEBRUARY 28, 1996
B
[B.P. JEEVAN REDDY AND K.S. PARIPOORNAN, JJ.]

) Penal Code, 1860: Sections 192 and 19J-Fabrication of false evidence
\ and its punishment-No request made for prosecution of the persons for

)~ fabricating false evidence at the appropriate stag&-Held, it cannot be allowed
subsequently after a gap of many months-An order levying penal interest
C

would meet the ends of justice instead of a direction for prosecutiolt-Code
of Criminal Procedure, 1973: Section 340-Central Excise and Salt Act, 1944:
Section 4.

Godrej manufactured refrigerators, besides other goods. These D
refrigerators, when delivered to dealers at distant places, were packed in
Corrugated Fibre Containers (CFCs) to protect them from damage in the
course of transport and for convenient handling. In the proceedings relat-
ing to ;aluation under Section 4 or the Central Excises and Salt Act, 1944
a question arose as to whether the value of CFCs was to be included in the
value of refrigerators. Godrej pleaded for exclusion of the value of CFCs E
which was rejected by the Assistant Collector but later on accepted by the
Collector. The same question again arose in the subsequent years when the
Revenue served the demand notice including the value of CFCs in the value
of refrigerators. Godrej approached the High Court.
F
The Writ Petition came up for hearing before a Single Judge of the
High Court. Meanwhile, the Apex Court had delivered the Judgement in
· Union of India and Ors v. Bombay Tyre International, [1984] (1) SCR 347,
laying down the principles governing the said issue. Before the Single
Judge, Godrej wanted to rely upon certain letters said to have been
addressed to it by dealers to support its claim for exclusion of the value G
of CFCs. Revenue opposed the admission of the letters. The Judge declined
to admit or rely upon the letters. The writ Petition was allowed on other
grounds. The Revenue filed a Letters Patent Appeal which was disposed
by the Division Bench of the High Court which also did not rely upon those
letters. H
1
2 SUPREME COURT REPORTS [1996) 3 S.C.R.

A A Special Leave Petition was prererred by the Revenue In this Court.
Meanwhile, the premises or Godrej all over the country were searched and
several documents were seized. A letter written by the General Manager
[Marketing] or Godrej was also seized. In the letter request was made to
the Branch Managers to obtain from certain trusted dealers ante-dated
B letters stating facts which supported Godrej's case for exclusion of the
value of CFCs. These were the letters prepared with an eye upon the
principles enunciated in Bombay Tyre International case which were sought
to be filed before the Single Judge. At that time, Revenue was not aware
that the letters were fabricated. It came to know about it only later on.

c Revenue contended that Godrej was guilty of fabricating evidence
and or trying to mislead the Court. This Court allowed the Special Leave
Petition and remitted the matter to the High Court with the order that the
High Court will consider the question of admissibility, relevancy and the
value or the letters and then come to the questio11 of assessable value of
D the refrigerators.

The matter was posted for bearing before Single Judge. Godrej chose
to abandon its case and wanted a settlement. But no settlement could be
reached. Godrej filed an application to withdraw the Writ Petition but
E Revenue opposed it. The Writ Petition was disposed of under what Is called
'Minutes or the Order". The Order provides for payment of duties due
from Godrej subject to certain observa!ions. The Order is not an agreed
order. It is an Order or the Court. It does not contain any reference to
Revenue's allegation offabrlcation ofevidence and prosecution of Godrej,
its officers and dealers.
F
After fifteen months, the Revenue took out notice of motion before a
Division Bench of the High Court requesting that appropriate criminal
proceedings be initiated against Godrej, its officers and dealers for
fabrication of evidence and attempt to defraud the Court on that basis.
G The Court passed orders directing the Registrar of the Court to file a
compaint before an appropriate criminal Court against Godrej and others
under Section 192 !PC. This Order was made under Section 340 Cr.P.C.
This Order was challenged in this Court.

H Disposing of the appeals, this Court
PHIROZEDINSHAWLAMv. U.0.1.[B.P.JEEVANREDDY,J.) 3

HELD 1.1 The Division Bench of the High Court was not wrong In A
making the direction under Section 340 Cr.P.C. for prosecution but it does
-+ not appear to have bestowed sufficient attention to the expediency aspect
as contemplated by the provision. It is quite possible that Revenue was
satisfied with the "Minutes of the Order' but changed its mind after a lapse
of fifteen months. [ll·G-H; 12-A) B
1.2. The 'Minutes of the Order" does not say that any request was
made by the Revenue to direct prosecution of Godrej and others. The
silence on the part of the Revenue can be construed as abandonment of its
plea for prosecution. Not having asked for prosecution at the appropriate
stage, Revenue cannot be allowed to ask for it after a gap of many months. c
[ll·B, F and E]
2. On consideration of the relevant circumstances including the fact
that Godrej has paid up all amounts due accepting the contentions of the
Revenue, an order levying penal interest would meet tbe ends of justice
instead of the direction for prosecution. [12-C] D

t CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4089 of
1996 Etc.

From the Judgment and Order dated 29.11.91 of the Bombay High E
Court in Notice of Motion No. 1318/91 in A. No. 429/86 in W.P. No. 1110
of 1983.

M. Chandrasekharan, Additional Solicitor General, U. R. Lalit, Soli
J. Sorabjee, Ram Jethmalani, Ashok Desai, (J.R. Gagrat, D.Y.

,
" Chandrachud, U.A. Rana, Amit Desai, C.M. Mehta, Rajiv Tyagi, Anand
Prasad) for Gograt & Co., N.K. Bajpai and P. Parmeswaran, Advs. for the
F

appearing parties.

The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. These six petitions are filed seeking leave G
to appeal against a common judgment of the Bombay High Court dated
November 29, 1991 directing. the Registrar of the High Court to file a
complaint against M/s. Godrej and Boyce Manufacturing Company Private
Limited and some of its officers and dealers under Section 192 of the
Indian Penal Code. This order was made under Section 340 of the Criminal H
4 SUPREMECOURTREPORTS [1996] 3 S.C.R.

A Procedure Code*, on the Court being satisfied prima facie that the said
persons have committee an offence punishable under Section 193 of tl11:
Indian Penal Code and that it is expedient in the interests of justice that
they should be tried therefor. Of the six Special Leave Petitions filed, the
petitioner in Special Leave Petition (C) No. 20051 of 1991, Sri K.S.
Gurumurth, died pending the Special Leave Petition. The said Special
B
Leave Petition has, therefore, become infructuous and is accordignly dis-
missed. One of the petitioners in Special Leave Petition (C) No. 20049 of
1991, Mrs. Ameen [fourth petitioner] has also expired pending the Special

340. Procedure in cases mentioned in Sec. 195.-(1) Where, upon an application made
to it in this behalf or otherwise, any court is of opinion that it is expedient in the
c interests of justice that an inquiry should be made into any offence referred to in Cl.
(b) of sub-section (1) of Sec. 195, which appears to have been committed in or in
relation to a proceeding in that Court or, as the case may be, in respect of a document
produced or given in evidence in a proceeding in that Court, such Court may, after
such preliminary inquiry-, if any, as it thinks necessary, - (a) record a finding to that
effect; (b) make a complaint thereof in writing; (c) send it to a Magistrate of the first
class having jurisdiction; {d) take sufficient security for the appearance of the accused
D before such Magistrate, or if the alleged offence is non-bailable and the Court thinks
it necessacy so to do, send the accused in custody to such Magistrate, and (e) bind over
any person to appear and give evidence before such Magistrate. (2) The power
conferred on a court by sub~section (1) in respect of an offence may, in any case where
that Court has neither made a complaint under sub-section (1) in respect of that
offence nor rejected an application for the making of such complaint, be exercised by
the Court to which such former Court is subordinate within the meaning of sub-section
E (4) of Sec. 195. (3) A complaint made under.this section be signed-(a) where the
Court making complaint is a High Court, by such officer of the Court as the Court
may appoint; {b) in any other case, by the presiding officer of the Court. (4) In this
section 'Court' has the same meaning as in Sec. 195."

Section 192 and 193 of the Indian Penal read thus :
"192 Fabricating false evidence. - Whoever causes any circumstance to exist or makes
" F any false entry in any book or record, or makes any document containing a false
statement, intending that such circumstances, false entry or false statement may appear
in evidence in a judicial proceeding, or in a proceeding taken by law before a public
servant as such, or before an arbitrator and that such circumstance, false entty or false
statement, so appearing in evidence, may cause any person who in such proceeding is
to form an opinion upon the evidence, to entertain an erroneous opinion touching any
point material to the result of such proceeding, is said 'to fabricate false evidence'.
G 193. Punishrnent for false evidence. - Whoever intentionally gives false evidence in any
stage of a judicial proceeding, or fabricate false r!vidence for the purpose of being used
in any stage of a judicial proceeding, shall be punished with imprisonment of either
description for a term which may extend to seven years and shall also be liable to fine;

and whoever intentionally gives or fabricate false evidence in any other case, shall be
punished with imprisonment of either description for a tenn with may extend to three
H years, and shall also be liable to fine."
PHIROZEDINSHAWLAMv. U.0.1. [B.P.JEEVANREQDY,J.] 5

Leave Petition. The said Special Leave Petition accordingly becomes in- A
fructuous insofar as the said petitoner is cortcerned. Of course, so far as
other petitioners are concerned, the Special Leave Petition Still survives.

Leave granted. Heard learned counsel for the parties.

Godrej, one of the corporate giants of this country, manufactures, B
among other goods, refrigerators. These refrigerators are packed in
polythene covering only when they are to be delivered to dealers suituated
'- at a short distance from the factory but where they have to be delivered at
distant places, they are packed in Corrugated Fibre Containers [C.F.Cs.]
to protect them from damage in the course of transport and for convenient
handling. In the proceedings relating to valuation under Section 4 of the C
Central Excise and Salt Act, 1944 for the period 1976-78, the question
arose whether the value of C.F.Cs. should be included in the value of
refrigerators for the purpose of value under Section 4 of the Central Excise
Act. Godrej pleaded for exclusion which plea was rejected by the Assistant
Collector. On Appeal, the Collector [Appeals] upheld Godrej's contention. D
The matter ended there so far as the said period is concerned. In 1982-83,
the Revenue served damand notices for a subsequent period, again includ-
ing the value of C.F.Cs. in the value of refrigerators. Godrej went to
Bombay High Court by way of Writ Petition No. 1110 of 1983 questioning
the said notices. The writ petition came up for final hearing before a
learned Single Judge in March, 1984. Meanwhile, this Court had delivered E
the judgment in Union of India & Ors. v. Bombay Tyre International, [1984]
(1) S.C.R. 347, in May, 1983, laying down the principles governing the said
issue among others. At the hearing of the writ petition before the learned
Single Judge, Godrej wanted to rely upon certain letters said to have been
addressed to it by its dealers to support its claim for exclusion of the value
of C.F.Cs. The counsel for the Revenue opposed the admission of the said F
letters at that stage. In view of the said objection, the learned Single Judge
declined to admit or rely upon the said letters. The writ petition was,
however, allowed on other grounds. The letters which were actually handed
over to the learned Single Judge in the Court, it is stated, remained in the
record of the Court. ' G
The Revenue filed a Letters Patent Appeal [No. 429 of 1986] against
the decision of the learned Single Judge which was dismissed by the
Division Bench in June, 1986. The Division Bench too did not refer to or
rely upon the said letters. A Special Leave Petitoin was preferred by the
Revenue in this Court against the judgment of the Division Bench in the H
6 SUPREME COURT REPORTS [19%] 3 S.C.R.

A year 1987. Meanwhile, certain developments took place, which are of
immense relevance to the controversy herein. In June, 1987, the premises
of Godrej all over the country were searched and several documents seized.
One of the documents seized was a letter dated June 1, 1983, written by
Sri Hathi [one of the appellants before us] addressed to certain Branch
Managers. At that time, Sri Hathi was the General Manager [Marketing]
B of Godrej. Under this letter, Sri Hathi requested the Branch Managers to
obtain from certain trusted dealers ante-dated letters stating facts which
supported Godrej's case for exclusion of the value of the C.F.Cs. The
letters from the dealers were to be obtained as if they were written between
May, 1976 and February, 1979. It were these letters - prepared with an eye
C upon the principles enunciated in Bombay Tyre International - which were
sought to be filed before the learned Single Judge at the hearing of Writ
Petition No. 1110 of 1983 in March, 1984 but which were not actually
looked into or relied upon by the learned Single Judg~ in view of the
objection raised by the Revenue. At the time the letters were sought to be
filed, the Revenue was, of course, not aware that they were fabricated. But
D the seizure of the said letter written by Sri Hathi (in the course of searches
conducted in June, 1987) convinced the Revenue that the said letters were
all fabricated to buttress Godrej's case in the light of the decision in
Bombay Tyre International. In the Special Leave Petition filed in this Court,
the Revenue filed copies of the said letters along with the aforementioned
letter of Sri Hathi contending that Godrej was guilty of fabricating evidence
E and of trying to mislead the Court by producing such fabricated evidence.
It prayed that the writ petition filed by Godrej should be dismissed on the
said ground alone without going into merits of the case. The Special Leave
Petition came up for orders before a Bench of this Court on September 4,
1989. The Special Leave Petition was allowed and the matter remitted to
the High Court under the following Order :
F
"Special leave granted.

We have heard counsel for the parties. Our attention has been
drawn to certain letters (appearing at pages 102 to 122 of the
G present S.L.P. Paper Book). The said letters were indisputably not
before the High Court or the authorities below at any relevant
time. We are of the opinion that the questions herein should be
considered in the light of these letters. The judgment and order
of the High Court in that light require to be set aside. We
H accordingly set aside the judgment and order of the High Court
PHIROZEDINSHAWIAMv. U.0.1.[B.P.JEEVANREDDY,J.] 7

and remand the matter to the HighCourt for consideration of the A
question afresh involved herein in the light of these letters. The
High Court will consider the question of admissibility, relevancy
& the value of these letters and then come to a conclusion about
the question of assessable value of the refrigerators and the con-
sequence of that determination.
B
The appeal is disposed of accordingly without any order as to
costs."

The matter was accordingly posted before a Division Bench of the
High Court which thought it appropriate that the matter be heard by the
very same learned Single Judge who had disposed of the writ petition C
earlier. Accordingly, it was posted before the learned Single Judge. By this
time, however, Godrej had become thoroughly demoralised. Caught in the
act of fabrication of evidence, it chose to abandon its case for exclusion of
the value of C.F.Cs. It gave up the fight. It approached the Revenue
authorities including the Central Board of Excise and Customs for a D
settlement. It said, it was prepared to accept the Revenue's case and pay
up all the duty due on that basis. It also offered to refund the amounts
which were refunded to it on the basis of the orders of the Court. It is
stated by the learned counsel for Godrej that they even offered to pay up
the duty for the period which had become time barred. There was no
settlement. At that stage, the writ petition came up for hearing before the E
learned Single Judge. A few weeks before the writ petition actually came
up for hearing, Godrej filed an application seeking to withdraw the writ
petition. It was opposed by the Revenue who has been contending all along,
i.e., before this Court as well as the Bombay High Court that inasmuch as
. Godrej has indulged in clear fabrication of evidence and has tried to
defraud the court on the basis of such documents, it should be dealt with F
sternly so that it would serve as a lesson to others. It was submitted that
any indulgent attitude in such matters will send a wrong signal and would
serve as an encouragement to persons similarly minded. The writ petition
was, however, disposed of under what is called "Minutes of the Order" on
March 12, 1990. The Order reads: G

"MINUTES OF THE ORDER

1. Petitioners agree and undertake to pay on or before 15th March
1990 the sum of Rs. 3.80 crores (approximately) comprising of the
excise duty of Rs.26 lakhs (approximately) for the period April H
8 SUPREME COURT REPORTS (1996] 3 S.C.R.

A 1979 to March 1980 and Rs. 354 crores (approximately) for the
period February 1983 to February 1987 being amount of duty
payable on secondary packing. The aforesaid payment will be
without prejudice to the rights and contentions of both the parties
in all pending petitions before High Court (save and except those
relating to the question of inclusion of cost of secondary packing
B in assessable value).

2. In so far as the question whether assessment made on RT-12
(save and except assessment in respect of secondary packing as
stated above) are provisional or final, this being a question of fact
c will be determined on the basis of record and as per the provisions
of Central Excise Act & Rules, thereunder.

3. Affidavit in reply dated 8th January 1990 filed by the Respon-
dents on 10th January 1990. Affidavit in Rejoinder dated 28th
February 1990 to the aforesaid affidavit handed over by the
D petitioner to the Respondents and Affidavit in sur- rejoinder dated
9th March 1990 on behalf of the Respondents are all taken on file
of the Court and form the part of the record of these proceedings.

4. On the above, Petitioners are permitted to withdraw the peti-
tion."
E
It is agreed before us that the above order was not an agreed order
but an order of the Court thought it was signed by counsel for both sides
for the purpose of identification.

The Order dated March 12, 1990, it is relevant to note, does not
F contain any reference to Revenue's allegation of fabrication of evidence by
Godrej nor to its request not to permit withdrawal - much less to the
request of the Revenue, which is supposed to have been made before the
learned Single Judge - to prosecute Godrej, its officers and its deafors in
a criminal court. The order merely provides for payment of duties due from
G Godrej subject to certain observations.

Fifteen months later, i.e., on June 25, 1991, the Revenue took out a
notice of motion before a Division Bench of the Bombay High Court
requesting that appropriate criminal proceedings be initiated against
Godrej, its officers and dealers for the aforesaid act of fabrication of
H evidence and its attempt to defraud the Court on that basis.
PHIROZE DINSHAWLAMv. U.0.1. [B.P.JEEVANREDDY,J.] 9

We may pause here for a moment a_nd mention as to why the said A
notice of motion was taken out before a Division Bench and was enter-
--'I tained by it and not before the learned Single Judge. It appears that prior
to October, 1990 all the writ petitions in the High Court were being heard
by a learned Single Judge but in October, 1990, there was a change in the
procedure, according to which writ petitions pertaining to Central Excise
were to be heard by a Division Bench alone. It is for this reason that the B
notice of motion was taken out before the appropriate Division Bench
according to the allocation of work by the learned Chief Justice of that
Court. The Divisions Bench heard Godrej and Sri Nauroji [Non-Executive
Director of Godrej] and passed orders, impugned herein, directing the
Registrar of the Court to lay a complaint before an appropriate criminal
court under Section 192 of the Indian Penal Code in accordance with law
c
against (1) Godrej (2) Sri K.N. Nauroji (3) Sri P.D. Law (4) Dr. K.R. Hathi
(5) K.S. Gurumurthy (6) P.C. Shah (7) N.H. Wadia (8) AD. Shah (9)
Mandakini Ameen (10) J.V. Udani and (11) M.K. Nanavati. Of the eleven
persons, six to eleven are dealers.
D
These Special Leave Petitions were entertained by this Court on
December, 1991 and the operation of the impugned order stayed. It was
directed that Special Leave Petitions shall be posted for hearing in the first
week of March, 1992. The Special Leave Petitions, however, surfaced only
after a period of more than three years when they were posted before the
E
Bench of Hon'ble Mr. Justice S.P. Bharucha and Hon'ble Mr. Justice B.N.
Kirpal on October 19, 1995. The Bench directed that the Special Leave
Petitions be posted before a Bench of which Hon'ble Mr. Justice S.P.
Bharucha is not a member. The matters were then posted before a Bench
comprising one of us [B.P. Jeevan Reddy, J.] on December 4, 1995, on
which. date the matters were directed to be listed for final hearing on F
February 20, 1996.

The entire thrust of the submissions 1nade by learn~d counsel for
appdlants is not with respect to the truth of fabrication aforesaid but with
respect to several procedural aspects. It is urged that six dealers aforesaid
G
were not even heard before making the direction to prosecute them and
that this omission vitiates the direction with respect to all. It is submitted
"' that the documents were not "tendered" in High Court but in the Supreme
Court and that the Supreme Court alone could have taken action under
Section 340 of the Criminal Procedure Code but not the High Court. It is
submitted alternately that only the learned Single Judge of the Bombay H
)

l

10 SUPREME COURT REPORTS [19%] 3 S.C.R.

A High Court who had heard and disposed of the writ petition could have
made that direction but not the Division Bench. It is also argued that in
the facts and circumstances of the case, it cannot be said that it is expen-
dient in the interests of justice to direct the prosecution of the said persons.
A prosecution should be ordered, it is argued, not merely because there is
evidence indicating prima facie guilt; it must also be found expedient to
B direct the prosecution. It is also submitted that the question of expediency
should have been decided only with notice to and after hearing the affected
parties. Such an order, it is pointed out, is an appealable one. Lastly, it is
suggested that on the facts of the case, Section 192 is not attracted because,
at worst, it was a case of fabricating evidence to support a genuine claim-
C rather an involved argument, we must say, if not a convoluted argument,
and in either case, unacceptable.

The learned Additional Solicitor General, Sri Jayaram, appearing for
the Revenue, however, supported the reasoning and conclusion of the
Division Bench. He disputed the correctness of the several contentions
D urged by the counsel for appellants and submitted that persons who indulge
in such crimes should be dealt with sternly and deterrent punishment
imposed.

For considering the contentions urged before us, it is first necessary
to ascertain the facts and the developments in the matter. What are they?
E
The Godrej did indulge in an act of fabricating evidence which was
unworthy of such a major company. It sought to buttress its case before
the learned Single Judge on the basis of the said documents. It is another
matter that they succeeded in their writ petition de hors the said fabricated
material. When, however, the letter of Sri Hathi was discovered during the
F searches conducted by the Revenue in June, 1987 and its misdeed stood
exposed, Godrej was put on the defensive. The initiative passed to Revenue
which contended not only that the writ petition filed by Godrej should be
dismissed on the said ground but that it should be dealt with in a manner
that it serves as a lesson to others. It is for this reason that the Special
G Leave Petition filed by the Revenue was allowed by this Court and the
matter sent back to the High Court for deciding the writ petition in the
light of the said letters. The High Court was asked to look into the
relevancy, validity and admissibility of the said letters - which admittedly
included the genuineness of the letters. With this turn of events, Godrej
naturally became nervous. It did not want to proceed with the writ petition.
H It approached the Central Excise authorities at various levels for a settle-
PHIROZE DINSHAW LAM v. U.0.1. (B.P. JEEVAN REDDY,J.] 11

ment but that did not materialise. It also sought to withdraw its writ A
petition, which was opposed by the Revenue. But what happened when the
writ petition came up for hearing before the learned Single Judge is
important: The writ petition was disposed of under what is called "Minutes
of the Order" providing for payment of duties by Godrej subject to certain
observations. The Order neither refers to the contention of the Revenue
relating to fabrication of evidence by Godrej nor does it refer to any B
request of Revenue to dismiss the writ petition on the ground of fraud
sought to be perpetrated by Godrej. The Order does not also say that any
request was made by the Revenue to direct the prosecution of Godrej, its
officers and dealers responsible for the said Act. This circumstance as-
sumes significance in view of the fact that the last para of the "Minutes of C
the Order" says that the affidavit dated January 8, 1990 filed by the
Revenue, affidavit of Godrej dated February 28, 1990 and the slir-rejoinder
[dated March 9, 1990] are taken on the file of the Court afld are made part
of the record. In the affidavit dated January 8, 1990, Revenue had set out
its case regarding fabrication by Godrej and asked for dismissal of the writ
petition on that ground alone. Neither this affidavit nor the sur-rejoinder, D
however, contain any request or prayer to direct the prosection of Godrej
and its officers and dealers. Two inferences follows from the above. The
Revenue chose not to persist in its submission to dismiss the writ petition
on the ground of the aforesaid fabrication and, at any rate, did not also
ask for a direction to prosecute Godrej and its officers and dealers for the E
said act or it did put forward the said submissions but they were rejected.
If the first inference is correct, then it is evide:it that not having asked for
the prosecution at the appropriate stage, it cannot be allowed to ask for
such prosecution after a gap of fifteen months. Its silence can be construed
as abandonment of its pleas for dismissal of writ petition and/or for
prosecution. If, on the other hand, the second inference is the correct one, F
.then the Revenue ought to have either applied for review pressing for
appropriate directions or filed an appeal against the order disposing of writ
petition. It did neither. It kept quiet for fifteen months and then moved a
notice of motion to prosecute Godrej and other persons responsible.

While we agree that the Division Bench was not wrong in making the G
direction which it did on the merits of the case, it does not appear to 'iave
bestowed sufficient attention to the above aspect and its impact while
deciding upon the expediency contemplated by Section 340 of the Criminal
Procedure Code. The Division Bench should have considered whether it is
expedient to direct prosecution when the learned Single Judge had chosen H
I

\
12 SUPREME COURT REPORTS [1996] 3 S.C.R.

A not to make such a direction - for one or the other reason pointed out
above and on account of the silence on the part of Revenue for a period
of fifteen months. It is quite possible that the Revenue was satisfied with
the Order ["Minutes of the Order"] dated March 12, 1990 but changed its
minds after fifteen months. It is not a question of jurisdiction or power but
one touching the question of "expediency" contemplated by Section 340 of
B the Criminal Procedure Code.

On a consideration of the relevant circumstances mentioned supra
including the fact that Godrej has paid up all amounts due accepting the
contentions of the Revenue, we think that an order levying penal interest
C would meet the ends of justice instead of the direction for prosecution
made in the impugned order. We may mention that when during the course
of hearing, we suggested this alternate course and wanted to know the
response of the appellants thereto, they agreed with alacrity to the course
indicated by us.

D For the reasons given above, we set aside the impugned order and
in its place substitute the following order :

Godrej and Boyce Manufacturing Company Private Limited shall pay
penal interest at the rate of twenty percent per annum on all the amounts
which were withheld by it, for the period commencing March 1, 1979,
E whether on the basis of the Order of the learned Single Judge of the
Bombay High Court dated March 10, 1984 [allowing Writ Petition No.
1110/83] or otherwise as well as on the amounts which it had obtained by
way of refund but which it ultimately paid back to the Revenue. The
interest shall be payable for the period commencing from the date when
the said amount/amounts became due and payable and ending with the last
F date of full payment. The observations in the nature of qualifications or
reservations contained in the Order [Minutes of the Order] dated March
12, 1990, insofar as they relate to inclusion of value of C.F.Cs. in the value
of refrigerators shall stand deleted. In other words, Godrej shall not
dispute the inclusion of the value of C.F.Cs. in the value of refrigerators
G for the period covered by the demand notices impugned in Writ Petition
No.1110/83 and upto March 12, 1990, the date of "Minutes of the Order"
aforesaid. ·

The appeals are disposed of in the above terms. No. costs.

J.N.S. Appeals Disposed of.